The duo were arrested yesterday by the police and handed over to Maharashtra's Dhulia police in connection with a VAT scam in Dhulia town, Indore Police's Crime Branch Deputy Superintendent of Police R C Rajput said today.

The two persons were identified as Arpit Garg (34) and Sachin Panwaar (35), he said.

A case was registered in Dhulia against nine persons, including the duo for supplying cotton to a Jawahar Shetkari Cotton Mill, evading VAT worth Rs 3.67 crore by allegedly forming fake companies with name and addresses in Maharashtra's Nandurbar, Nagpur, Jalgaon, Aurangabad, Hingoli, Dhulia and other cities, the DSP said.

Soon after the FIR was registered in this regard in Dhulia on March 15, 2014, nine persons went absconding, he said.

The kingpin of the absconding traders was Dinesh Agrawal, who lives in Indore and Sendhwa town, police said, adding they have launched a hunt to nab him.